GNC takes the day off to reset pricing

Discussion
Source: GNC (Facebook)
Dec 29, 2016

GNC, the retailer of vitamins and supplements, closed about 4,500 of its U.S doors on Wednesday to make its shift to a simplified pricing structure under the new slogan, “One New GNC.” The stores reopened Thursday.

In October, the retailer admitted that inconsistency in pricing between its website and stores as well as discrepancies over what it charged loyalty members versus casual buyers was confusing customers.

”Our multi-tier pricing program often included the following cascade of prices: list, Gold Card member, non-member, promotional, and different prices at company-owned stores versus online,” interim CEO Robert Moran said in October on the company’s third-quarter conference call. “Obviously, this is overly complicated and doesn’t drive the desired consumer behaviors. More importantly, our pricing communications strategy led consumers to believe we were not competitively priced even in instances where we were.”

The chain also launched a free myGNC Rewards program to complement its paid Gold Card loyalty program. Mr. Moran said the paid loyalty program limited GNC’s customer data collection because some consumers refused to join.

Under the changes, retail prices decreased on about half of its items, remained the same on about a quarter, and increased for another quarter. Some short-term fallouts were expected. For instance, online same-store sales fell 30 percent in the third quarter as online and offline prices were synchronized.

Said Mr. Moran in a statement announcing the one-day closing, “We’re confident it will have a positive impact on the business, but it will take time for the changes to take hold and translate to improved financial results.”

The one-day closings reminded Brian Sozzi of Street.com of Starbucks’ three-hour closing in 2008 to retrain employees on customer service after Howard Schultz returned as CEO. Chipotle also closed its doors last year for a day to reinforce safety procedures following its E. coli outbreak.

Krystina Gustafson of CNBC, on the other hand, was reminded of the struggles J.C. Penney and Jos. A. Banks faced trying to wean customer off promotions.

DISCUSSION QUESTIONS: Do you see any correlation between GNC’s pricing overhaul and what occurred at J.C. Penney and Jos. A. Banks? What do you think of one-day closings to support company-wide changes?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
" I think it’s a great effort but I question how much of their troubles are price related."
"It sounds as if the jury is still out on if the net result will be a positive or negative for GNC."
"I think it takes more than a one-day closing to become relevant to consumers."

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4 Comments on "GNC takes the day off to reset pricing"


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Bob Phibbs
BrainTrust

Things have to be pretty bad when you’re willing to close all your outlets for an entire day. I think it’s a great effort but I question how much of their troubles are price related. I’ll be interested to see if they give up all of the promotional POP that littered their stores for years.

Steve Montgomery
BrainTrust

The numerous prices for the same item certainly would create confusion in the consumer’s mind. Three-fourths of their retail prices stayed the same or declined which should be positive for retail sales, but this is offset by the 30 percent decline in online same-store sales. It sounds as if the jury is still out on if the net result will be a positive or negative for GNC.

Patricia Vekich Waldron
Staff
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
5 years 4 months ago

I think it takes more than a one-day closing to become relevant to consumers.

Jeff Sward
BrainTrust

My interpretation is that the one day closure is directed at employees in the short term and customers in the medium and long term. It’s a way to huddle up and bring attention to CHANGE. It’s not an email and it’s not a tweet. It’s a company-wide team meeting directed at getting everybody on the same page. I applaud it. They could have done it quietly or in this higher profile manner. If they had done it quietly we would not be talking about it.

I love it when a retailer says, “We have listened hard and are making changes. And, we want credit and attention paid to those changes!” It brings the focus back to making quality products that customers will pay a fair price for. Gutsy move. I hope it works.

wpDiscuz
Braintrust
" I think it’s a great effort but I question how much of their troubles are price related."
"It sounds as if the jury is still out on if the net result will be a positive or negative for GNC."
"I think it takes more than a one-day closing to become relevant to consumers."

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